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In brief

ASIC has released a new immunity policy setting out the process and conditions for whistleblowers to obtain immunity from certain civil penalty or criminal proceedings (Immunity Policy). The Immunity Policy extends the types of protection available to a whistleblower beyond those which became available under the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) (Whistleblowing Legislation) which came into force in 2019. As a result there is an increased risk that employees may elect to go direct to ASIC rather than raising an issue internally.


In Depth

The Immunity Policy

The Immunity Policy is here. The Immunity Policy applies to an individual (not a corporation) who:

  • thinks they may have contravened, with at least one other person, a provision in Part 7.10 of the Corporations Act 2001 (Cth) which includes insider trading, market manipulation, false trading and market rigging, and dishonest, misleading and deceptive conduct in relation to financial products and services.
  • is the first to come forward and disclose to ASIC about the misconduct. Once an individual has been issued with a “marker” as the first person to report the misconduct, no other person can qualify under the Immunity Policy unless the first person’s “marker” is revoked or withdrawn.
  • is not an instigator of the misconduct and has not coerced another to be involved in the misconduct.
  • intends to fully cooperate with ASIC in relation to any investigation and court proceedings.

If the individual complies with all conditions set out in the Immunity Policy:

  • in respect of civil penalties, ASIC will grant conditional immunity to the individual in the interim then grant final immunity to the individual once all legal proceedings have been concluded; or
  • in respect of criminal proceedings, ASIC will make a recommendation to the Commonwealth Director of Public Prosecutions (the CDPP) for the CDPP to issue a letter of comfort in the interim then grant an undertaking under section 9 of the Director of Public Prosecutions Act 1983 (Cth).

However, under the Immunity Policy ASIC will not grant immunity to an individual in respect of:

  • administrative actions including actions to disqualify an individual from managing a corporation, ban an individual from providing financial services / engaging in credit activities or revoke, suspend or vary the conditions of a licence. Therefore, an individual applying for immunity would still face the risk that they could be prevented from continuing in their current role as a result of blowing the whistle.
  • compensation actions under section 50 of the Australian Securities and Investments Commission Act 2001 (Cth), pursuant to which ASIC can take representative action to recover damages or property for persons who have suffered loss.

Interaction with the Whistleblowing Legislation

Significantly, the Immunity Policy adds another layer of protection for whistleblowers beyond those that were introduced by the Whistleblowing Legislation in 2019. Under that legislation a person who makes a “qualifying disclosure” cannot be subject to any civil, criminal or administrative liability (including disciplinary action) for making the disclosure e.g. a claim against them for breaching their confidentiality obligations. However, they could still be liable for criminal or civil action in relation to any role they played in the conduct they are reporting. Under the Immunity Policy, such a whistleblower could now also gain protection against civil or criminal penalties in relation to the conduct itself. You can read more about the Whistleblowing Legislation in our previous alerts here and here.

What does this mean for your company’s approach to whistleblowing protections?

The Immunity Policy provides an incentive in the form of immunity for a wrongdoer to report misconduct directly to ASIC rather than reporting internally. Given that many of the offences to which the Immunity Policy applies are offences where a company could also be charged, a potential result of an employee seeking immunity could be an investigation against the company or against other individuals within the company.

This highlights the need for companies to ensure that their employees and other associated persons are aware of their ability to report any misconduct internally and that they have confidence that any such reports will be dealt with confidentially as required by the Whistleblowing Legislation. This requires not only a strong whistleblower policy (which for listed and large proprietary companies must comply with the requirements under the Whistleblower Legislation) but also regular and comprehensive training of both those who may be eligible whistleblowers and those who may be eligible recipients. Whilst a company cannot offer an employee the type of immunity offered by ASIC, if employees feel confident that the company will take the appropriate actions promptly then they may be more willing to come forward and disclose any misconduct to the company. The company will then be able to conduct its own internal enquiries and determine the appropriate action including whether to self-report to the regulators.

For any assistance on whistleblowing policies or training, please feel free to contact our Team.

Author

Georgie Farrant is a partner in Baker McKenzie's Dispute Resolution Practice Group in Sydney and head of the Firm's Compliance & Investigations team in Australia. She has over 20 years of experience in disputes and compliance matters, including working for a regulator and an in-house compliance team.

Author

Gareth Austin is an associate in Baker McKenzie's Sydney office.

Author